Updated at 9:09 am EST
Palantir Technologies (PLT) – Get a free report Stocks soared in early trading Tuesday after the data analytics group co-founded by billionaire Peter Thiel criticized Wall Street’s fourth-quarter profit forecasts and said demand for AI would likely drive faster growth of profits over the next year.
Palantir is gaining a foothold in the world of AI technology with its AIP Logic platform, which allows companies to create specific functions that leverage their big data language models without having to use complex computer coding.
Related: Big tech stocks are doubling down on AI
“AIP is the AI-powered operating system for the enterprise, not a Q&A bot, not an agent framework, not a way to break in, but a way to deliver,” Palantir’s COO told investors , Shyam Sankar, in a conference call. the Monday in the afternoon.
AIP, along with Palantir’s legacy government business, which is tied in part to its work with the Central Intelligence Agency, is helping the Denver group drive impressive profit growth while taking a growing share in the commercial AI market.
Palantir saw revenue growth of around 70% in its US business operations in 2023, compared to 32% in 2022, with a record number of new deal signings valued at more than $1 million, thanks to its AIP pilot programs and training camps.
That segment is likely to see higher profits this year, the company said, with U.S. revenue expected to rise 40% from 2023 levels.
“Our experts indicate that the commercial sector in the US is a high-growth opportunity for the company as more companies increase their investments in AI,” said Jordan Berger, an analyst at Third Bridge. “Palantir appears to be successfully capitalizing on this enthusiasm for AI with its AIP offering, but the extent to which this initial success translates into long-term growth remains to be seen.”
Palantir’s overall revenue is expected to increase about 20% from 2023, to between $2.65 billion and $2.67 billion, and profits will quadruple to between $834 million and $850 million.
Palantir in prime time on Broadway: analyst Ives
“A handful of times every decade there are technology companies that are well ahead of the competition and in a sweet spot for future growth… yet (Wall Street) then dismisses it by dusting off its stubborn long-term bearish thesis. and 30 spreadsheets,” said Wedbush analyst Dan Ives.
“Last night for Palantir was when this company went from an off-Broadway play to a prime-time theater right off Times Square under the bright lights,” he added.
Ives raised his price target by $5 to $30 per share, while reiterating an outperform rating. He added that “we also believe that inclusion in the S&P 500 is on the near-term horizon given this pace of profitability.”
DA Davidson analyst Gil Luria also raised his price target for the group, albeit at a more modest dollar per share, to $19. He rates the stock as neutral.
“Palantir is capitalizing on its expanded market opportunity with a (go-to-market strategy) that is resonating with customers, and the company is poised to continue accelerating growth through 2024 based on enduring interest in its platform,” Luria said.
Citi analyst Radke highlights PLTR’s free cash flow
Citi analyst Tyler Radke was also impressed by last night’s earnings, which included a trailing profit of 4 cents per share, his fifth consecutive quarterly profit.
Radke added $10 to his price target, bringing it to $20 per share, while raising his rating to neutral from sell. He cited an “inflection” in earnings potential in the group’s US trading business and its improvements in free cash flow.
More AI actions:
- AI Wave Takes This Stock to Record Highs as Investors Look Beyond Mag 7
- AI Stocks Soar on New Guidelines (It’s Not Nvidia!)
- Big tech stocks are doubling down on AI
Palantir said free cash flow could approach $1 billion this year, a nearly 37% improvement over 2023 levels.
“What you see is a convergence of our product being easier to use, an increase in its charisma, both driven by developments in AI and large language models, which make the product accessible to the market in overall,” CEO Alex Karp told investors. the Monday in the afternoon.
“This is a revolution for traditional companies that have already solid distribution and products, which is why we are obtaining enormously superior performance,” he added.
Palantir shares rose 21% in pre-market trading to indicate an opening price of $20.22 each, a move that would extend the stock’s one-year gain to around 143% and value the group at around $50 billion.
Related: A veteran fund manager picks his favorite stocks for 2024